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Feature
Allocattees pulled up for
inordinate delay
Peeved at the dismal progress, the coal ministry has
pulled up existing coal block allocattees, both public
and private, for delay in the development of captive
blocks. Only last month, the ministry declared it has
identified as many as 93 coal blocks where almost all the
requisite milestones are pending. Of these, 45 belong
to government sector companies and the rest 48 to the
private sector.
The list of these ‘laggards’ include large companies
including NTPC, ArcelorMittal, Bhushan Steel, Monnet
Ispat, Hindalco, Usha Martin and GVK Power, among
others. Since September to date, the ministry has issued
show cause notices to at least 31 block allocattees. Four
blocks were even deallocated during the April to June
period.
“We want to enhance coal production of the country.
For this, we can snatch the coal blocks back,” coal
minister, Sriprakash Jaiswal, has said.
Recently, the coal ministry asked all captive block
allocatees and joint venture companies (JVCs) to submit
information about the status of captive blocks and
associated end-use projects, to the Office of the Coal
Controller and the ministry by October 15. This was part
of the quarterly review exercise conducted by the ministry
to examine the progress made in the development of
such blocks.
In the last review meeting held between July 20 and
July 21, 2010, it was decided that all the JVCs will collect
the status reports of coal blocks and their associated enduse
projects of individual block allocatees and submit the
same to the Office of the Coal Controller at the end of
every quarter.
It means these 25 coal blocks would now be allotted
through bidding route.
The system of allotment of captive coal blocks to private
and government companies was introduced way back in 1993
and since then, 215 such blocks with estimated geological
reserves of about 50 billion tons have been allotted to about
310 public and private sector companies in power, steel,
sponge iron, cement and fertiliser sectors.
However, of the total blocks allocated so far, around
8 blocks have been cancelled by the coal ministry as the
entities to whom these blocks were allotted had violated
various terms and conditions of the allotment. Out of the total
blocks allotted, around 100 coal blocks have been allotted to
government companies with geological reserves of about 27
billion tons and about 105 coal blocks have been allocated to
private companies with geological reserves of about 18 billion
tons. A number of blocks have also been allocated to Ultra-
Mega Power Plants (UMPPS)
At the beginning of the current Eleventh Plan or towards
the end of the Tenth Plan (2006-07), it was envisaged that
coal production from captive coal blocks would be increased
substantially to around 117 million tons per annum (mtpa)
from 2011-12 (terminal year of XIth Plan).
Incidentally, production from captive coal blocks was to
account for around 15 percent of the country’s coal requirement
of around 731 mt that was earlier envisaged in 2011-12 (now
reduced to 713 mt).
However, it has been found that out of the total blocks
allotted so far, only 26 have reached production stage and
together they are producing around 30 mt of coal annually.
The provisional production from 25 operational captive coal
blocks was around 34 mt in 2009-10.
The production in 2008-09 stood at 30.02 mt. and the
production from existing and upcoming captive coal blocks
in the terminal year of the Eleventh Plan is estimated to
be around 80.89 mt as per the mid-term appraisal held in
September 2009.
It is estimated that only about 5 more blocks would reach
production stage by March 2011 and the rest of the blocks are
far away from reaching that stage.
In such a situation, the initial target of achieving production
to the tune of around 117 mt coal from captive coal blocks in
2011-12 seems impossible.
According to an estimate of Coal Insights, the production
from captive coal blocks at best could reach 70 mt by 2011-12
even though the mid-term appraisal had put the figure at 80.89
mt. Anything beyond 75 mt looks impossible at the moment.
Reasons for delay in starting production from captive coal
blocks
It has been found out that there are primarily six to
seven reasons for delays in starting production from not
only captive coal blocks, but also from blocks in possession
of Coal India Ltd (CIL) and Singareni Collieries Company
Ltd (SCCL).
The first and foremost reason is the huge delay in
acquisition of land and associated problems of rehabilitation.
The second relates to delay in diversion of forest land and the
third pertains to delay due to non-approving or permitting
exploration in forest area.
The fourth reason comprises delay due to adverse geomining
condition and the fifth is delay due to fire. The sixth
important reason for delay in starting new projects is due to
the law and order situation.
Additionally, there are other miscellaneous problems
such as delay or discontinuance of work by contractor, non
participation in tender, DGMS permission, and so on.
It would be noteworthy to find whether this new system of
COAL INSIGHTS 26 October 2010